D4.1 Territoriality scoping paper

As part of the Recreating Europe project, one strand of work focuses on how the territorial nature of copyright and related rights can hinder the realisation of the digital single market. While for e.g. trademarks and designs the EU have legislated community wide rights that extend across borders of individual Member States, copyright and related rights remain national at heart. Authors, performers, phonogram producers, database producers, broadcasters, press publishers, film producers all acquire bundles of national rights in their respective (intellectual) productions. Despite far-reaching harmonization of the subject-matter, scope and duration of national right, these rights remain restricted in their existence and exploitation to the geographic boundaries of the Member State under whose law they arise, i.e. they are territorial.

This paper sets out ‘the problem with territoriality’ in the context of the digital single market, analyses the friction with the idea of a single market, and categorizes the various techniques employed by the legislature and courts to curb its adverse effects. In doing so, it prepares the ground for further research to be undertaken as part of the Recreating Europe project.

There are different mechanisms currently used to overcome certain drawbacks of territorial rights in a single European market. They are dispersed throughout the acquis communautaires but can be grouped as:

-Limitations to the exercise of distribution rights (exhaustion doctrine)

-Fictive localisation of acts in one particular place ('country of origin principle')

-Mutual recognition and pan-European licensing

-Harmonization of private international law rules (we discuss this but signal that these are at best second order solutions).

What is clear is that it is to a large extent the development of communication technologies, and the possibilities these bring for cross-border provision and use of services, that drives the need for solutions overcoming territorially organized copyright. The solutions seek to reduce legal uncertainty primarily for (professional) users of materials protected by copyrights and related rights by clarifying which national laws must be taken into account. They also generally make it easier to acquire permissions or meet remuneration obligations by reducing the number of territories and thus (potentially) rights holders involved. It is much less clear what the solutions bring right holders; who as we shall see in the next section on the music and film industries by and large prefer the system of territorial rights. From the fact that the solutions tend have a narrowly defined scope of application, and in the process of lawmaking from proposal to law are toned down sooner than expanded, it may be deduced that right holders see more threats than opportunities.

With respect to the mechanisms deployed, there is a clear preference on the part of lawmakers so far to opt for reducing the liability of (professional) users for copyright claims arising in different Member States through the presumption that the user only performs relevant acts at her place of establishment. Of the measures described in the paper, six are instances of such fictive localization. The exhaustion doctrine can be regarded as a carve out from the exclusive distribution right. There is only one instance of a true mutual recognition rule, i.e. the obligation for Member States to recognize the orphan work status acquired in another Member State. Close to this in its effect are the rules on the exception for the visually impaired, which essentially give national exceptions extra-territorial (pan-European) effect for both providers and users of materials. Direct interference with the territorial scope of licenses is also rare, the one example being the out of commerce extended collective licensing model. The music industry is a sector where collective licensing traditionally plays a major role, and where the EU legislative framework has been substantially adapted to promote efficient multi-territorial licensing. Territorial rights however remain the cornerstone of the system. This is also true for the film industry, despite the rise of cross-border broadcasting and streaming services.

Please note: a screen-reader accessible version of this report can be downloaded via this link https://docs.google.com/uc?export=download&id=1makpDB45BTddHChMeOWZcMfpWTXpBmSV